In 2010 Americans spent 17.6 percent of gross domestic product (GDP) on healthcare, which was eight percentage points above the Organization for Economic Cooperation and Development (OECD) average. Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) spending alone made up 21 percent of the 2012 federal budget (Center on Budget and Policy Priorities, 2013). American healthcare is by far the most expensive in the world, yet the quality patients receive from this investment is somewhere near the middle of the pack when compared to other economically developed nations (Fuchs and Millstein, 2011). Recent estimates suggest that the amount of wasted, excess costs in healthcare were $765 billion for 2009, which was $100 billion more than the entire Department of Defense budget for that year (Institute of Medicine, 2012). In order to curb such expenses, the cost of care needs to decrease and the quality of care needs to increase.
The length of a patient's hospital stay, referred to in the industry as the length of stay (LOS), is a fundamental factor in the increasingly important and complex interplay between the quality of healthcare delivery and medical costs. The inpatient environment bolsters the intensity of care and longer hospital stays have been associated with a lower incidence of adverse outcomes leading to readmissions (Heggestad 2002). However, the hospital is also an exceptionally expensive care delivery environment. The objective of decreasing medical costs, or at least reducing their outsized rate of increase, would be well served by reducing LOS. If the average LOS could be reduced by just 5 percent, the savings would exceed $64 billion. However, lower LOS may lead to higher hospital readmission rates, which is a focus of concern of Medicare.
Hospital readmissions have recently become a critical healthcare quality metric for American hospitals. In 2010, 19.2 percent of Medicare patients were readmitted within 30 days of discharge, resulting in additional hospital charges totaling $17.5 billion (Office of Information Products and Data Analytics, 2012). Hospitals and physicians are encountering increasing pressure to reduce hospital readmission rates, both from reputation effects from public disclosure of performance and pay-for-performance reimbursement schemes that refuse payment for related readmissions.
Surgical patient readmissions can be triggered by postoperative complications (e.g. surgical wound infections), aggravation of comorbidities (e.g. diabetes or heart disease), poor transitions of care from the in-patient to out-patient setting, or low quality post-discharge healthcare. One approach that could reduce readmissions would be to increase LOS; however, significantly increasing LOS would jeopardize the financial viability of a hospital because of capitated payments by Medicare and insurance companies. Regardless of whether a patient stays in a hospital for two days or two months, the hospital gets paid the same amount for the care with capitation contract insurance. Hence, the challenge is to decrease LOS without simultaneously increasing readmission rates.
Despite the critical nature of the inpatient stay, responsibility for the discharge decision currently resides with practicing physicians and is largely a subjective decision. Although guidelines for LOS for specific diagnostic-related groups exist, it would be desirable to improve hospital discharge decision making by providing the physician with an objective indication of the likelihood of an individual patient being readmitted to the hospital if he or she were discharged. More particularly, it would be desirable to provide such an indication that is based upon the patient's own idiosyncratic susceptibility to complications and his or her own specific comorbidities.